Tighter rule sinks Japan chemical exports to S. Korea by 83% in July

TOKYO – Japanese shipments to South Korea of hydrogen fluoride, a chemical subject to newly tightened export controls amid frayed bilateral ties, plunged 83.7 percent to 479 tons in July from the previous month, government data showed Thursday.

The export value of the material used to clean semiconductors also dropped 32.6 percent to 400 million yen ($3.78 million) in the reporting month, the Finance Ministry said.

The material is one of three chemicals which Japan made subject to
export restrictions from July 4, requiring exporters to obtain a license
prior to each shipment to South Korea.

Up until July 3, Japan allowed domestic exporters to apply for
three-year preferential permits for exports of the chemical to South
Korea.

Tokyo has cited national security concerns for its imposition of the
tougher rules, but the decision is widely seen as retaliation for top
South Korean court rulings last year that ordered some Japanese
companies to compensate Koreans who claimed to have been victims of
wartime forced labor.

Only products containing 30 percent or more hydrogen fluoride are
subject to the stricter export controls and the exact impact of the
measures remains unknown in the latest data.

The ministry does not collect individual statistics covering the
other two products — photoresist and fluorinated polyimide — that are
used in the production of semiconductors as well as display panels for
smartphones and televisions.

Japan has a large market share in all three materials and South
Korean manufacturers of semiconductors and display panels, including
Samsung Electronics Co., are expected to take a hit.

On Wednesday, Tokyo revoked Seoul’s status as a trusted trade
partner, deleting its neighbor from its “white list” of countries that
enjoy minimum trade restrictions on goods such as electronic components
that can be diverted for military use.

Japan maintains that the issue of compensation for wartime labor was settled “finally and completely” in a 1965 bilateral agreement.